BANK INDONESIA / BI - JAKARTA. Bank Indonesia (BI) will establish a clearinghouse for derivative transactions in 2018 to make local institutions that offer derivative products more competitive, BI deputy governor Perry Warjiyo said in Jakarta on Thursday.
According to international rules, if a derivative transaction is not settled through a Central Counterparty (CCP) Clearing House, it is subject to a10 percent margin due to higher counterparty risk, he explained.
"The margin causes derivative products offered by Indonesian financial institutions to be less competitive than the products offered by foreign players. So, we need to establish a CCP clearing house," he said during a BI outlook event.
Currently, derivative contracts in Indonesia are over-the-counter (OTC) and the counterparty risk is subject to both parties, he said, adding that with a CCP, the counterparty risk would be centralized to the clearing house.
Perry said the new clearing house would be linked to the Indonesian Stock Market Clearing House (KPEI).
